Daily Briefing – Tuesday, June 13, 2017
The FTSE is up 0.3% this morning after yesterday’s election-gloom losses – 0.21%, its 5th losing session in a row. And to indicate the general mood, the Queen’s address to Parliament, scheduled for next Monday, has been postponed, as have been the start of Brexit negotiations with the EU. In Europe, yesterday’s data shows a severe drop in Italy’s industrial output – down to 1% from March’s 2.9%, and an upgrading of France’s GDP expectations for the year’s 2nd quarter, based on better than expected trade deficit for April.
US government spending surged 17% in May pushing its budget down from its $182b March surplus to a deficit of $88b. the culprits: Medicaid and defense. Yesterday the US treasury published its preliminary draft for easing banking regulations set up as the Obama inspired Dodd-Frank Wall Street Reform Act. And tomorrow, the US Federal Reserve is expected to rule on a June interest rate hike. Meanwhile, across the border, the Bank of Canada is indicating a possible interest rate hike itself, as the economy – according to BoC Snr. Dep. Gov Carolyn Wilkins – “broadens” and monetary stimulus is already “significant”. The Canadian dollar increased 0.31% in the Asian session on the comments.
Ten Chinese companies may be sanctioned by their government for trading with North Korea upon US demands of China. Australian business conditions softened slightly in May as the central bank’s confidence index dropped from 13 in March to 7. The news comes as economic growth is at its slowest growth pace in 8 years – prompting expectations of an interest rate hike. Otherwise, Asian markets tended to ignore the US tech-share dip after losses spread into the continent on Monday. The Kospi rebounded 0.7%, the Hang Seng 0.5 and the Nikkei by 0.01 on a still fear-buoyed yen.
As investors await tonight’s API oil reading, the EIA yesterday released a report estimating June output from the US to be 5.35mB per day, its first double-digit increase in 2 years, signaling a 98% increase in 12 months. Goldman Sachs expects shale production to hit 12mB per day. And in another report also released yesterday, Goldman Sachs has begun covering Bitcoin news, as hedge funds begin trading in the asset. The crypto currency took a $400 hit yesterday following the Nasdaq crash and has since recovered towards the 2700 zone.
Apple shares have been downgraded for a 2nd time this week, after shares lost 3% yesterday as FAANG (Facebook, Amazon, Apple, Netflix, Google) and NVidia stocks continue to drag down the Nasdaq. Analysts are blaming market structure distortions for the selloff that began on Friday and are expecting stocks to recover in the short run. Good news for GE, which has won an government approval to merge its energy sector activities with Baker Hughes. – this after the failure of Halliburton to take over the oil rig operating company.
|8:30 AM GMT||UK: Retail prices, housing prices. PPIs & CPIs|
|9 AM GMT||Germany & EU: ZEW economic sentiment|
|12:30 PM GMT||US PPIs & Redbook index|
|8:30 PM GMT||API Crude Oil Inventories|